News and commentary about road pricing across the globe. Tolls, congestion charging, distance based charging, road user charging. Public policy, economics, technology and more. If Google brought you here, look down the right sidebar for references.

Tuesday, 2 December 2014

On 30 November 2014, manual tolling finally ended at the Dartford Crossing - the 4 lanes each way tunnel/bridge crossing of the Thames that connects the eastern ends of the M25 ring motorway around London. Already the southbound toll booths that lead down from the QE2 bridge have been removed as is seen here in FleetNews, with the northbound ones to be removed in coming months

Dartford Crossing toll plazas at the southern side of the tunnels/bridge

The system that has been introduced is an electronic free flow system that relies on automatic number plate recognition, and requires all motorists using the crossing to either:

- Set up a pre-pay account that deducts the toll every time the vehicle crosses a tolling point;

- Make one-off payment via phone, online, retail outlet or by post no later than midnight the day after the crossing is made.

Of course, while the tolling has been automated, the booths have yet to be removed, which caused some chaos on the first day as many motorists stopped to try to pay for a toll at empty booths with barriers raised. The problem being that, on weekends, most users are not regular enough to be aware in advance of the change. I suspect also that there will be a deluge of penalty notices that might be sent out, although I suspect the operator would be wise to not send out any such notices for the first day, and subsequently focus enforcement on any repeat violators.

With full removal of the toll booths, there should be a significant improvement in the quality of service of the road, with congestion of 7-11 minutes on average being largely relieved.

Tailbacks northbound at Dartford Crossing toll plaza should be no more

Because with congestion relieved, the toll prices are being increased by 20% (although there is a 13% discount for those with accounts) and there is no indication about what the money raised is for. It is, in essence, being treated as a tax, or more accurately, as one of the government's most profitable ventures.

Dartford Crossing toll prices with discount for account holders

Although it is legally a congestion charge, the toll does not vary at peak times, or by direction (even though there is a reasonable case for doing this), although it does not operate for 8 hours a day (overnight) to encourage heavy commercial traffic in particular to use the M25 at night.

Friday, 7 November 2014

Back in July, I noted that the long awaited Ecotax, heavy vehicle road charging system for France, was on hold, because of politics.

A new plan was developed to only toll 4000km of roads, not the 15000km originally envisaged, with the emphasis being on only charging motorways and major highways with parallel tolled motorways, and also on handing a political gift to Brittany, where opposition to the toll was greatest.

The problem in Brittany was that the French Government's efforts to convince people, or more specifically, truck owners and operators, that paying by distance is fair, didn't wash with those in far off parts of France. They figured the toll was "unfair" because they "had" to use longer stretches of road. Quite why others should pay for them to have roads they use because of where they choose to locate themselves wasn't clear, but then France has multiple layers of accretive subsidies, and anyone who dares challenge this simply meets protest.

In July, it was envisaged that the toll system would start operation on 1 February 2015, but not any more.

According to The Local, the toll has been shelved, indefinitely. It appears that the deep unpopularity of the Socialist Francois Hollande government has put pressure on this project, which ironically had been approved under the Sarkozy government.

Ecology Minister (and former leader of the Socialist Party) Ségoléne Royal announced the government would not be introducing the tax. The rightwing opposition said it showed that there was "no government" because of constant "zigzagging". The EELV (green) party said the decision was "disastrous" showed "lack of courage", claiming it would cost the government €450 million in lost net revenues per year (it is closer to €550 million).

Reasons given for the suspension were:

- Difficulties of implementation (which is simple nonsense, as it was never an issue technically, rather politically);

- Concerns about costing jobs in the haulage industry.

The government instead decided to tax more heavily the multiple companies that own France's privatised toll motorway system, although it is not clear how this also wont cost jobs in the haulage industry, or it simply will mean more traffic on the untolled government owned roads as tolls increase.

The consortium contracted to implement the system will now seek many millions of Euros in compensation for the termination of contract.

What could have been done?

I'm tempted to think that rather than scrap the scheme, efforts could have been made to reduce other taxes on the haulage sector in exchange for the Ecotax. Reducing taxes on licensing/registration of liable vehicles would have helped, and be more efficient transferring such costs from the ownership of a vehicle to usage. However, a more complex option would have been to offer a refund mechanism that included refunding part of the diesel tax. This would have had to be done to generate some revenue to make it worthwhile, but at least by cutting other taxes there would be a chance to gain some consent for the project.

Unfortunately, it looked like a chance to just increase taxes on one sector, without little publicity about the roads that would get fixed by the project. Quite simply, there needed to a proposition to road users to support it (bear in mind it was only for trucks), making it just a new charge with little in return is not going to be popular.

It's a shame, because France does have a problem of heavy use of untolled motorways, but the right solution needs to be about striking a deal with those paying, that the money generated goes into the networks being tolled and that another tax is cut in return.

Tuesday, 26 August 2014

Dallas News reports on plans from the North Texas Tollway Authority, North Central Texas Council of Governments and Texas DoT to embark on a major expansion of tolling in the city. This includes not only including tolls on all major new projects, but retrofitting HOT lanes on existing highways and converting HOV lanes to HOT lanes where feasible.

The report includes a map depicting an extensive network of future toll lanes (which I suspect means HOT lanes) which will mean the city will possibly have the largest such network of any such city in the world.

The lanes are expected to enable traffic to be managed during major sporting events or catastrophes, as they can serve as emergency vehicle lanes in such conditions.

Michael Morris, transportation director for the North Central Texas Council of Governments talked of the problems with a 1985 air crash at DFW “In that case, it was difficult for all of the ambulances and firetrucks to get where they needed to go”.

Opposition comes from politicians in Collin County, which opposes converting HOV lanes to HOT lanes, largely because of a belief that there are enough tolled routes in the county.

What's telling about this report is how pervasive and extensive the proposed network will be. It will mean that for perhaps the majority of Dallas motorists, the option of paying to use a lane will be the norm for their trips.

My views on HOT lanes are based on considering the total economic and financial costs and benefits:

- Converting an underutilised HOV lane to a HOT lane increases utility, raises revenue, significantly reduces congestion for its users, and marginally reduces congestion for non-HOT lane users, so it is likely to be beneficial.

- Building a new HOT lane is almost always never going to be financially viable, because the capital costs of the additional lane are unlikely to be recovered from the peak users. A pure toll lane may be marginally more likely to be viable, but again it will only be where congestion is chronically bad that sufficient users will be prepared to pay enough to pay for the extra capacity.

- Toll lanes are likely to be more beneficial than HOV lanes, as HOV lanes tend to provide free benefits to couples travelling together as much as incentivising car pooling. Far better to ration by price than rewarding chance.

- In the longer term, their value is in demonstrating what pricing can deliver, but if they are not financially viable it means a better solution is to price the whole network, appropriately, which includes looking at the role of fuel taxes.

Thursday, 10 July 2014

As has been previously reported, the French Government had been committed to implementing a distance/size based heavy goods vehicle charge on all national highways (this excludes the extensive private and public corporation owned toll motorway network), using GPS technology, called Ecotax. As the name suggested, it was sold on the basis of improving the environment, but was driven by a desire for net revenues from foreign trucks and to rebalance the use of the highway network, by reducing the attractiveness of the untolled national highways that often run parallel (although longer distances) to the tolled motorway network.

The politics behind the concept came under fire late 2013, as the Hollande Government (the laws and contracts for the system having been committed under the previous Sarkozy Government) faced protests on the eve of the system's introduction. The main complaints being from the trucking sector, opposing additional charges, and businesses in some more distant parts of France, notably Brittany, which have argued it is discriminatory because they are "further away" from other parts of the country.

The calls from the trucking sector for opposing "more tax" are understandable, given no other taxes are being reduced to offset the Ecotax (although the French Government is keen to reduce the budget deficit, given it has not run a budgetary surplus for 40 years and public debt levels are becoming a significant burden). However, to complain about paying by distance when you locate your business far away from suppliers or customers is almost comedic. Yes you will pay more, but you use more roads that need maintaining and renewing. Quite why choosing to live far away from where you want to go, or get things from should be cross-subsidised by others, seems curious.

So the scheme was shelved, until now.

Smaller scale truck toll

So on 23 June it was announced that the Ecotax is to proceed, but on a smaller scale and simply be called a "truck toll". According to Reuters, Prime Minister Manuel Valls said the new scheme would focus on the roads with the heaviest traffic and will generate 550 million Euros (US$748m) per annum, less than half of the 1.24 billion Euros (US$1.69b) previously forecast.

It will start on 1 January 2015, following a three month testing period (and changes to the law and no doubt contracts with the suppliers).

What has been lost?

The network to be tolled is now only 4,000 km long, compared to the 15,000 km that was going to be tolled before (comprising 10,000 km of national highways and 5,000 km of secondary routes that would have been severely affected). That is a significant reduction in scale, and is seen by comparing the maps of the original scheme and the new one below:

Original planned Ecotax network

Ecotax network from 1 January 2015

Very few highways to the west and the south are now to be tolled, with the emphasis being entirely on state highways which have parallel tolled highways and heavy volumes of traffic. It's a significant compromise. Part of this is that all but one road in Brittany is exempt. In other words, protest in France and politicians cave in.

The Local reports further changes. It says the charge levels could be 0.13 Euro per km, whereas before the range was from 0.025-0.20 Euro per km.

Circus, agricultural and milk collection vehicles will be exempt. The circus example is obviously some minor cultural exemption for little reason that lobbying, but the agricultural lobby, which is a long standing campaigner for some of the most generous subsidies in the world, has won again. Agricultural equipment being relocated short distances is one thing, it is another for a whole new category of freight vehicles to be exempt, for no other reason than the politics behind expecting one of France's most mollycoddled sectors to be treated like everyone else.

Still it is significant to introduce it in the first place, and it makes sense in itself, although the argument that other taxes could have been reduced to offset it is a valid one. Diesel tax in France is 0.44 Euro per litre (US$2.26 per gallon), although EU law sets a floor that would only allow a reduction of around 17%, and the French Government is desperate for more tax revenue, rather than rebalancing the tax system (and reducing tax on diesel would benefit cars with no new toll for them).

The net revenues are said to be dedicated to new urban public transport projects, which of course doesn't have a direct relationship with trucks on intercity highways, but is better than just adding money to general funds. Of course, not spending the money on roads is a good way of generating opposition.

What isn't clear is how it affects the contract with supplier Atlantia, which will still seek payment for services, from a smaller revenue pool. It will add to the net costs of the system relative to revenue.

- The remainder will be to recover the 600 million Euro (US$735 million) capital costs over the period of the concession, which is 11.5 years.

Those operating costs will not drop by 60% just because the revenue does, I suspect more like 30%, and the capital costs will change little given much of them have been incurred. So it may come to pass that 40-45% of the revenue generated will be spent on the costs of the system, rather than 20-25%. That hardly looks like a great deal for anyone paying.

What this doesn't mean

It doesn't mean the technology doesn't work. It doesn't mean that it isn't a good idea.

What it does mean is that the biggest problem is the politics of adding a new charge on top of an industry that faces taxes for owning trucks and high fuel taxes.

Moreover, it does mean that unless you have the politics addressed and have the determination to go through with it, you'll face losses of revenue in backtracking, and it can result in compromises that unfairly target some less vocal groups against the more vocal (and indeed violent).

The result, will be more traffic on tolled highways, a little less on the newly tolled state highways, and a little revenue for the state, and probably a modest reduction in environmental impact.

What it needs is a more convincing story around where the money will be spent, the rates the charges are set at, and in having some offsetting reduction of other taxes, what it is now is a smaller scale political fudge.

Thursday, 5 June 2014

As part of aviation policy, the UK government set up an independent commission to examine the need for additional UK airport capacity and recommend to government how this can be met in the short, medium and long term.

Whilst I don't want to go into details about that process (the website for the Commission is here) what has come out of it so far is that a shortlist of options have been selected by the Commission for more detailed work. One of them is construction of a third runway at Heathrow Airport, and within that proposal is a surface access proposition that includes a congestion charge for road traffic accessing the airport.

I'm not going to comment on the proposal at all here, as my sole interest in placing it on this blog is for the interest of readers regarding road pricing, and because I am myself undertaking work for the Airports Commission. As such I am neither expressing a view about the proposal for a congestion charge, nor any of the airport expansion proposals (which for the purposes of completeness include proposals from Gatwick Airport Limited and Heathrow Hub, with a separate investigation into the idea of a new Thames Estuary Airport). Heathrow's proposal is the only one so far to refer to road pricing and is mentioned as a post-2040 implementation. Certainly I don't believe there are any such charges applied at airports elsewhere in the world, although parking charges may sometimes be used to partially address this.

Beyond 2030, once our comprehensive network of public transport services is in place, we believe there is a case for introducing a new congestion charge zone to further reduce vehicle journeys to Heathrow. Revenues could be ring-fenced to fund major rail, London Underground and road infrastructure improvements. It could also be used to fund sustainable travel initiatives, public transport service improvements and local community projects. If expansion were to proceed we would work with local people and relevant authorities to define how such a zone would be applied. These public transport improvements will enable Heathrow to deliver more flights, without increasing airport related traffic on the road.

We believe there may be a case for introducing a congestion charge zone at Heathrow, once public transport improvements are in place. This would provide an opportunity to manage airport traffic levels and emissions by charging those with the biggest impact. We would wish to consult on many issues to ensure any such proposal is appropriate and fair, such as exemptions that could be offered to blue badge holders, low emission vehicles, local residents and licensed taxis. A charging zone will provide an opportunity to ring-fence revenue (in the form of an enhanced ‘Super’ Public Transport Levy fund). This could be used to support funding of major surface access schemes, and to fund sustainable transport projects in the wider area to benefit local communities.

Certainly this is one option to address traffic congestion at major airports. The final report of the Airports Commission will not be released until mid 2015, which is expected to recommend a preferred airport expansion option. It is not clear whether that will include any comment on the congestion charge element of the Heathrow proposal, whether or not Heathrow's airport expansion proposal is recommended by the Commission for adoption by government.

Wednesday, 4 June 2014

The biggest tolled urban highway tunnel in the world? Well certainly the most expensive if it were ever to be built.

That's what has been proposed for London - yes London, according to the Evening Standard. Now there isn't money to finance it, nor planning permission or any details. It is, at best, a vision of what might be a good idea, primarily to get ring road traffic off of the at street level connected series of streets that currently form the congestion charge zone, and into tunnels.

The cost is mooted at around £30 billion (US$50.5 billion), which is eye-wateringly high, but reflects deep-bored tunnels and likely very expensive sites for entrance and exit points. However, let's think about how it might work:

- Tolls 24/7 at revenue optimising levels. Should be little real concern about monopoly pricing here;
- Extend the London congestion charge zone out to the boundaries of this road, hypothecating net revenue to the new road (and charging by distance and time of day);
- Reallocating road space from parts of the inner ring road for other road users, but also parking and commercial use, raising more revenue;
- Recovering part of the increase in value from properties along existing roads seeing a significant reduction in traffic;
- Dedicating the tunnels to ultra low emission vehicles operating in semi-automatic formations, so that capacity is doubled;
- Using the tunnels to facilitate express bus services as well (London has few of those);
- Replacing fuel duty on London roads with a distance based charge reflecting capacity and demand.

I believe the idea has some merit, and I think arguments about local air quality may well have significantly dropped due to technology by the time this sort of road might be completed, but also technology will have significantly increased capacity on existing roads. Claims it will just fill up with traffic would be countered by tolling, and given that central London traffic is growing again with the congestion charge, it may simply be that London road users would be willing to pay for a faster road at levels not seen in other cities.

It is certainly worth some more detailed scrutiny and a range of scenario modelling exercises, but I suspect it will be some years before this will come to any fruition. Perhaps more realistic might be parts of the plan or a few strategically located tunnels to bypass major bottlenecks (from point 9 to 7 on the map for example, or 6 to 5). It is radical for a city that has had no major new road capacity built since the 1990s with the controversial East Cross Route.

It's important to think about several dimensions to the idea which should mean thinking about it differently from past proposals, such as the previous ringway ideas for London.

- Fully electronic free flow tolling means that such a road can be priced to avoid inducing demand that exceeds capacity. Indeed such tolling should enable higher charging of parallel routes, so that through traffic is taken off of existing streets.
- Ever lower emission vehicles should help address environmental concerns. Having such a road provide discounts for such vehicles can help accelerate this.
- Greater automation of vehicles, allowing more capacity on existing roads, but also increasing capacity of new roads enhancing their utility and closing the gap between rail and road based transport for urban capacity.

All of this is not in the short term, but plans for major highway projects like this are far from short term, and so should be developed with an eye to that sort of future and given the scarcity of land in London, identifying locations for entrance points to tunnels should be the priority because acquiring such land and gaining planning permission to use it for that purpose is going to be the number one issue (it isn't money that people will protest about).

Below is the network (in blue) of motorways/major arterial highways London would have got had plans in the 1960s been completed, which was for four ring highways to be built. This is superimposed on what exists, as the only one that was built was the M25, combining parts of the third and fourth ringway. It wold have meant an inner ring motorway, a second ringway taking the North Circular and extending it, and a third ringway linking up with the M25 at the northwest and the southeast, plus a few other new motorways (notably the M23 to the south, M12 to the east and M1 extended south). Had it been built as planned, it would have had a brutalist impact upon the city in many locations, but the counter is that many town centres are blighted now by high levels of arterial traffic that would otherwise have bypassed them.

London, has the entire ringway motorway plans come to pass with a few additional radial routes.

Compared to that grand plan, below is what was actually built, besides the M25, only parts of other roads were completed, notably much of the North Circular was upgraded, the East Cross Route built to connect the Blackwall Tunnels to the North Circular and A2, and the infamous Westway and stub of a West Cross Route. Much more detail can be found out about London Ringways on these websites, CBRD and Pathetic Motorways. Of course the result of this is that it's far easier to get across north London than south London by road, and there is a dearth of river crossings east of Tower Bridge.

M25, A406, A12, A312, A40 - what little of London ringways that was actually built

The new London inner toll tunnel ring would look something like this, below, in addition to the current network.

London's main highways with a mooted inner city tunnel highway

So it would be different from what was originally planned, would feed off of existing arterials from the east and west, but is specifically designed to enable the existing street level ring road to be substantially altered in parts to accommodate more pedestrians, cyclists and buses, whereas previous plans were to add capacity primarily to relieve congestion, rather than also reallocate road space.

From a road pricing point of view, it represents perhaps a very expensive and grand version of what has already been done in Oslo. Can pricing, the rise of ultra low emission vehicles and modern tunnelling create new roads in central London that enhance the environment and mobility?

I think it's worth looking at, but given I am resident here I've written a bit more background on the idea, since it is not entirely new.

Monday, 19 May 2014

I reported on 27 March that Infrastructure Partnerships Australia had published a discussion paper called "Road Pricing and Transport Infrastructure Funding" which has essentially recommended a move from ownership and fuel taxes to distance based charges for road use, including mass, location and time of day components.

I have since had a chance to read the report, so that I can now give a more detailed review of the paper. It's worth reading in its own right, at least because the way it is presented and structures the key issues is both accessible and logical.

It's notable for being a report commissioned not only by contracting sector lobby groups (who would traditionally be expected to endorse more construction), but also motoring clubs (who would traditionally be expected to endorse more construction and resist user charging). This report is not pushing construction, and openly admits that big cities are unable to "build themselves out" of congestion, although there will be an ongoing need for new road capital investment. It does support road pricing, and it also supports using some road pricing revenue to enhance public transport. That is fairly revolutionary in thinking from these sorts of entities, and is to be applauded.

It is important to note that not all Australian motoring clubs are parties to this report, but many key ones are. It indicates a level of analytical rigour and honesty to admit that the future will be improved by measures that, on the face of it, many if not most motorists will be sceptical about. There are plenty of motoring clubs worldwide that simply oppose user charges and call for more road construction to fix major problems, hopefully this report will catalyse some to apply some more economic rigour.

The report has a number of key things going for it:

- The key limitations of existing forms of motoring taxation are outlined. Taxing ownership and fuel has major issues of equity, sustainability and lack of flexibility, which are not compensated for by simplicity.

- The benefits of user charging are made clear around network efficiency and addressing congestion.

- A range of options are looked at, and assessed at a strategic level according to some clear objectives

- A pathway of small steps to go forward with is presented.

- It has the endorsement of a number of several (although not all) motoring clubs in Australia. Getting support from this lobby is crucial and important, given how influential it is.

It is worth reading in its own right, but I thought it would worthwhile providing a brief synopsis of the main points. I have also included some graphics from the report, which is blatant plagiarism, but help to explain some key points.

The consortium comprises T-Systems (76%) and Strabag (24%), with Belgacom as telecommunications partner.

Strabag subsidiary Efkon will provide the enforcement software and system technology, T-Systems will provide the communications and charging technology. The contract is expected to be an availability charge basis. Finalisation of contract is expected in July 2014 with 18 months for testing and implementation, with tolling starting in 2016. The contract for construction and operation would be until 2027.

The contract will include 40 fixed enforcement sites and 40 mobile enforcement units.

There is no news as to whether any charging system for cars is also to be established.

Of course what's particularly peculiar about this piece of news is that it is not the Belgian Government doing this. It is the three regional governments of Belgium operating in unison (Flanders, Walloon and Brussels).

Thursday, 8 May 2014

Whilst it is not strictly about road pricing, reform of management of the national highway network in England is of relevance, if only because of the profound absence of any discussion about how charging might be linked to the funding and management of roads.

What has been announced is the corporatisation of the Highways Agency, the executive agency of the Department for Transport that currently manages England's strategic road network. What this means is that the new Highways company (let's call it England Highways Ltd.) will no longer be a government agency, but will act as an autonomous company owned by the state.

- A new company is to be established, with the Secretary of State for Transport listed as sole shareholder, to vest the contracts, property and staff of the Highways Agency;

- It will be empowered to manage, operate and maintain the strategic road network;

- The framework for governance will comprise Legislation, a Licence, a Framework Agreement, a Road Investment Strategy and Articles of Association;

- A Road Investment Strategy with a "long-term funding guarantee, a performance specification and a defined funding and investment plan" will be established. This means there will be a commitment of funding over a set number of years (approximately seven years);

- There will be environmental performance responsibilities and incentives to improve environmental performance;

- The company will be required to co-operate with local authorities, emergency services and "other stakeholders";

- The public transport users' representative quango "Passenger Focus" will include a "Road User Focus" unit, and the Office of Rail Regulation will include a "Strategic Road Network Monitor" to ensure the new company "delivers its commitments efficiently and effectively";

- Legislation will amend planning powers to make the new company a statutory consultee for relevant planning applications.

There will be no powers for the new company to toll, as it will be funded from central government through its Road Investment Strategy guaranteeing state funding for a set number of years. From that the company will implement the strategy, but its role in informing the strategy will be advisory. So whilst it has independence and accountability, the decisions on what gets funded will still be undertaken external to the company. Indeed, no mention has been made of private finance, indicating no push for PPP based financing, but rather a more traditional Pay As You Go model.

Friday, 2 May 2014

In the United States, the Interstate Highway network has long been a source of pride. One of the few really grand Federal Government projects that didn't involve defence or space that large numbers of average Americans regularly use.

Whilst it is an interstate network, unlike national highway networks seen in other countries, it is not managed by a single agency. The name "Federal Highways Administration" (FHWA) sounds like a body that would undertake this role, but rather the states take responsibility for looking after the parts of the Interstate network within their jurisdiction. The FHWA oversees the allocation of Federal funds for this purpose, as well as Federal funds for other highways within states. The FHWA also sets standards for highways, sponsoring research on highways and transport management.

Funding comes from the Highway Trust Fund, which is itself funded from hypothecated Federal fuel taxes, currently US$0.184 per gallon (US$0.048 per litre) for petrol and US$0.22 per gallon (US$0.064 per litre) for diesel. It also receives tax revenue from a tax on tyres, a sales tax on trucks over a certain size and annual heavy vehicle tax.

It is well known that given that the fuel taxes have not been increased in 21 years, a combination of inflation and increasing fuel efficiency has eroded revenues to the Highway Trust Fund in real terms. The shortfall is over US$10 billion a year, so that general Federal funding has been to subsidise plug the gap. The approach being to use Federal legislation to authorise spending, and then worry about the revenue afterwards.

Of course, the Federal Government has reflected problems at the state level, with some states facing similar deficits on their own highways, they have chosen to use tolls to assist with funding highways. Texas and Florida are notable for this, but many other states have done so too.

Tolls on Interstate Highways were restricted to new capacity, being brand new roads or additional lanes on existing ones. Now The Hill reports that the Obama Administration is willing to allow states to toll existing lanes to help fund projects. The Transportation Bill that has been introduced into Congress would remove that blanket restriction, meaning that states may be able to charge existing roads as long as there are improvements to the highway corridor.

The administration plan would let states toll interstates to pay for repair or replacement of the highways. Many interstates, built to last 50 years, are past their life expectancy and in need of more substantial repairs than simple repaving. States would also be allowed to introduce "variable tolling, tolls that change according to the time of day or traffic conditions. The tolls are designed to encourage more drivers to carpool or use public transit in an effort to relieve congestion.

So it appears that large-scale maintenance/renewals and improvements can all be justification for tolling, and on top of that tolling that varies by time of day to reflect demand. This is a significant step forward and represents perhaps the single most worthwhile transportation policy measure that the Obama Administration has introduced.

The IBTTA has understandably applauded the move in a press release. It should mean more tolling, and as such tolling where it can work. That means places where the traffic volume can generate enough revenue, and the alternative untolled routes are significantly inferior, so tolls wouldn't divert traffic onto them (I can assume State DOTs can get the modelling for that right)

Monday, 28 April 2014

I wrote on 27 March that the a Finnish Government Working Group had recommended that the country move away from fixed taxation of motor vehicles towards a distance based approach. I've now had a chance to read the full report (in English) of the Working Group and to digest its analysis and approach, and it demonstrates the one rule of thumb I've often seen in road pricing studies across the world - every country has considerably different contexts, but many common issues.

On 3 February 2012 a working group was established to explore how Finland could move towards "fairer and smarter transport systems and study long term strategies to introduce road pricing systems, with a specific mandate to assess the feasibility of GPS road pricing". The focus was on looking at global experience, what objectives road pricing could serve, what technical solutions could be viable, what impacts would arise and how and over what timescale it could be introduced. The working group was also to look at privacy and whether any other services could be provided using the GPS platform.

This follows previous investigations into congestion pricing for Helsinki alone, which came to the conclusion that the best approach would be some form of distance based charging that varies by time and place.

Summary

The key points from the study are as follows:

- Existing fixed taxes for cars should be replaced with a distance based tax. Those taxes include car tax (paid on first registration of vehicles in Finland) and annual vehicle tax and vehicle motive force tax.

- The tax considered for the purposes of the study would be €0.033/km (US$0.074/mile) on all cars with another €0.02/km (US$0.045/mile) for non-petrol cars to offset the lower diesel tax. Some variants on this were tested based on a regional differentiation.

- The distance tax would not replace fuel tax. Finland's fuel tax rates are €0.6729/l (US$3.52/gallon) for petrol and €0.4966/l (US$2.60/gallon) for diesel, compared to the EU legal minimum rates of €0.359/l for petrol (about US$1.89/gallon) and €0.33 (US$1.72/gallon) for diesel. (note these are US Gallons for the sake of comparison, not imperial).

- Motoring taxes in Finland already recover more than five times the state spending on road maintenance, with none of the money hypothecated for roads, so the argument for distance tax was not based on revenue generation or protection, but rather dynamic improvements in economic and environmental outcomes. By law, such a charge can currently only be a tax in Finland.

- Shifting from fixed taxes to fuel taxes was considered, but ruled out because it would not offer the potential to target congestion and environmental impacts by location and time of day.

- The distance tax would not apply to buses and coaches because no fixed taxes apply to them.

- The distance tax would also not apply to HGVs because the fixed taxes that apply to them could not be reduced sufficiently to make the tax work, as the rates are not far above EU minimum rates.

- The net impact of a shift to distance tax by 2025 is estimated as being a 30 million reduction in annual car trips, with a 4% drop in CO2 emissions from cars and around the same proportionate drop in serious car accidents.

Change in passenger km estimated in 2025 from introducing distance charging in Finland

- Most car users would pay less, with commuters in cities and high usage rural users paying more. The net effect is to reduce barriers to car ownership, but encourage car usage when and where alternatives are not available.

- The estimated capital costs for such a system, for 3.5 million cars, were €89m-133m (US$123m-US$183m) (which I believe to be far too low), but operating costs were estimated at between €116m-133m (US$161m-US$183m) per annum. The report indicated more scrutiny is needed over these costs.

- However, these higher costs compared to the current tax system would be recovered by the reduced costs to the economy of fewer accidents and emissions. The savings from reduced congestion were not calculated, but given evidence from previous studies ought to deliver substantially higher economic gains, even if charges did not vary by time of day or location.

- It was considered that the primary benefit from the change would be to allow for charging by specific road and time of day, so congestion charging could be introduced equitably, targeting congestion and locations where there are reasonable public transport alternatives.

- It was strongly recommended that any distance tax have strong privacy protection, so that all data on specific trips be kept with the on board unit and in the possession of the vehicle owner, with only charging data released. Other data could only be accessed if the owner wished to query the tax calculation or if there is suspicion of systematic fraud.

- There could be industry development potential in allowing such a system, as it would encourage local business to develop complementary systems and potential applications to use alongside the distance tax.

So, Finland is considering a car only based distance tax to replace taxes on owning cars. That's interesting and revolutionary, but I also think it is missing some key points, which I come to below. These are:

- Fuel tax ought to be included down to EU minimum rates;

- By including fuel tax, all other vehicles should be taxed by distance and mass;

- The rates of distance tax should reflect, at a minimum, infrastructure costs;

- By shifting to distance tax Finland cannot evade a strong case for partial hypothecation of revenues, in which case it may be wise to consider part of the charge not being a tax, legally speaking;

- The capital and operating costs need far closer scrutiny;

- The benefits of shifting to distance based charging may be overstated around accidents, due to technology around automation, but understated by excluding the deadweight costs of existing taxes.

Wednesday, 23 April 2014

Congestion in New York City is not going to be solved by tolling a few of the East River Bridges or putting a cordon to the north of 60th Street.

Move NY fair tolling plan

There are going to be some distortions in economic activity because of the placement of the cordon on 60th Street, and by the adding of tolls on some crossings.

Roads aren't going to be better managed, nor is public transit going to be better managed just because New York City gets some more money from motorists. There are more fundamental governance, incentive and management issues with all of that infrastructure.

However, on balance the plan by Move NY called "Fair Tolling" will make a positive difference. It will reduce congestion, it will encourage more use of public transit, walking and cycling, it will improve mobility to those locations to the east with higher tolls, and will improve air quality.

No other single policy measure can have such a positive difference on New York transport and the environment, whilst also having positive impacts on the economy. It wont be sufficient, but it will be a very positive change indeed. There will be less car use around downtown Manhatten, and possibly a little more on the periphery where tolls will reduce. There will be more efficient use of crossings, as some motorists don't divert to avoid tolls. Buses, trucks and taxis should have much easier trips, and there will be more public transit usage. There may even be more cycling if the infrastructure is up to it.

There will, of course, be more money to spend on transport infrastructure, but it will take some convincing for enough people to be willing to pay for something they don't pay for now. That's what needs to happen in the coming years. Years I say, because it takes patience and time, and for it to be known that this isn't going to go away. There may be one or two more failed attempts politically at pursuing similar reforms, but the logic about doing so is difficult to undermine completely. At best opponents don't like it because they don't believe they can convince voters to like it.

predominantly apply to cars. The term for that in German is PKW-Maut (effectively "passenger car toll"). However, it is not a toll, either in conventional parlance nor under European law (which counts it as a "road user charge" although it applies regardless of how frequently you use the charged road during the period of te vignette).

Friday, 11 April 2014

As I reported around a week ago, Germany is taking two significant steps forward in expanding charging of road vehicles, on both motorways and major federal highways.

1. Expansion of scope of the LKW Maut truck toll to cover trucks from 7.5-12 tonnes, and to toll over 1,000km more of previously untolled Federal Highways.

2. Introduction of a vignette (pre-paid time based charge) for light vehicles across the autobahn network

It follows from nearly 10 years of operation of the ground-breaking, and initially fraught ridden LKW Maut truck toll system. This is the first of a two part post about the major changes happening to road charging in Germany, and covers the expansion of the scope of the existing truck toll system.

Terminology in this sector is often troublesome, so let me very clear about the dimensions of the LKW Maut.

Thursday, 10 April 2014

To be fair, for personal reasons, I have neglected the issue of the Gauteng Freeway Improvement Project in South Africa, which undoubtedly has been the most controversial road pricing issue in Africa in the past year. It involves introducing free flow tolling on a 201km network of mostly upgraded and some new highways in South Africa.

I've written a few articles about this project in the past three years, including noting the risks of non-compliance, when tracing vehicle owners and fining them hasn't been fully developed.

Unfortunately, those risks weren't properly heeded. I wish I hadn't been right, but I was, there are some serious problems - not with the technology, but with the business processes and preparation for the toll system's introduction.

You'll find almost all of my articles about South Africa are about this project, by looking at this page and the older articles here (unfortunately I used links to SANRAL - the government's highway company - website for images which are no longer valid).

Tolling was launched on 3 December 2013 and whilst Kapsch, the well-known equipment and system supplier for the scheme, reported that the launch had been a success, there are other stories indicating some nuances to this. It should, of course, have been technically successful, given the launch date was put back nearly a year. Given it uses what is now (EU) standard DSRC 5.8GHz technology with ANPR cameras, it would have been a surprise had there been a major failure.

However, the Times (South Africa) reports that there is a shortfall in revenue of just under R500m (US$48m) from recovery of overdue tolls. Bills of around R543m have been sent but less than 10% have been paid. It had cost R50m in debt recovery costs (around US$4.8m), of which R32.8 is postage and invoicing costs (US$3.1m) and the remainder in processing the invoice (from detection to identifying the vehicle owner).

Therefore, in my view, whilst the on-road systems are working, the customer management function has been disastrous, not because those undertaking it are incompetent, or that the technology is wrong, but because adequate provision was not made for handling the human factors. So, motorists are by and large driving and ignoring bills, and the longer this goes on, the more they are going to do it.

Friday, 4 April 2014

ITS International reported in November 2013 that all 900km of Taiwan's toll highway network were to be converted to fully electronic operation by March 2014. It actually happened on 2 January 2014. It said:

The roads, which include three north-south routes with 22 toll points, carry out around 1.7 million transactions a day, generating some US$700 million of annual toll revenue.

Far Eastern Electronic Toll Collection is the company commissioned with operating the system. According to the report, FEETC choose ISO 18000 6C sticker tags to be implemented, on cost grounds, and had achieved 85% takeup by November 2013. The system is meant to be backed up by ANPR cameras to identify and charge vehicles without tag accounts. Given Taiwan is an island, there is no issue of cross border traffic. I had reported over three years ago that tolling tags were to be compulsory from 2012, but it appears the island has moved away from that for the implementation of fully electronic tolling.

Taiwan's tolled "freeway" network

Taiwan's toll system is based on distance, so vehicles are charged based on entrance and exit points onto the system. The first 20km any vehicle travels every day is untolled, beyond that cars are charged at a rate of NT$1.2 (US$0.04) per km up to 200km, followed by NT$0.9 (US$0.03) per km for any after that on a calendar day. Accounts are prepaid and need to remain topped up, otherwise bills are sent by mail to registered vehicle owners at a higher cost.

Strictly speaking, Taiwan isn't a country (I wont fill this blog with the history of the Republic of China), so I wont say this is the first country in the world to have a fully electronic tolling network for all vehicles on its major highways. However, that's the only reason why I wont say it.

Getting up to date information on how the Taiwanese system is going is difficult in English, so if anyone has reliable information about the Taiwanese system and reactions to it, they would be welcome.

Thursday, 3 April 2014

Russia is proceeding with what looks like being the largest network road pricing system in the world, in terms of network distance. That system is to charge all trucks 12 tonnes and over on Federal Highways by weight and distance. I wrote about this in 2012, and Russia is in the midst of a procurement process for the system.

Russian Federal Highway network will have the world's largest road pricing system in place

Kapsch put out a press release in November 2013 that a consortium of two of its companies and Russian company JSC (NIS) had prequalified in the tender process. The winner was meant to have been notified on 17 March 2014, but whether that has happened or whether it remains confidential whilst concession contracts are negotiated is unclear.

Wednesday, 2 April 2014

"UK Labour Party to announce plan to scrap VED and halve fuel duty in exchange for pay-as-you-go road pricing based on weight and emissions"

but no, I wont expand on that tiny April Fools joke.

Whilst the Liberal Democrats did include in their manifesto an interest in road pricing (and in ending spending on upgrading roads), for either major political party in the UK to bite the bullet on this issue would require both the policy foresight and PR skills to pull off convincing voters that existing taxes would be reduced or abolished in exchanged for paying for road use directly.

Tuesday, 1 April 2014

DNA India reports on growing congestion in Mumbai and how congestion charging has been raised as a possible solution. The city has faced a 7% increase in vehicles in each of the past seven years and has been mulling various demand management options including a 200% tax on a second family car. Whilst it is clear Mumbai can't sustain every increasing growth in vehicle usage and ownership, the point is that it will stop eventually, and having blanket taxes on home ownership will open ample opportunities for evasion. The obvious one will be to register vehicles at addresses of family members without cars.

The article does talk about congestion charging elsewhere, not representing the examples it uses well (Singapore has moved well beyond the Area Licensing Scheme and "value pricing" in the US is HOT lanes, which offers little in this context).

Monday, 31 March 2014

Anyone who visits Beijing can't help but notice the intensity of the levels of traffic in the city, which parallel the toxic atmosphere that blankets it as well. Whilst it is unfair to blame Beijing's air primarily on road transport (Beijing did have many heavy industrial plants located there as part of a Maoist policy of glorifying such industry), it is clear that the excess demand for the available road space is not only strangling the city economically, but also contributing to its suffocation by pollution.

I've written before about the challenges in implementing congestion pricing in Beijing:

My view is that it can be done, but is probably best implemented on a zonal basis at this stage, with the key issue being able to enforce against number plates in a consistent, fair and well managed way.

China Radio International reports that "The Beijing Municipal Environmental Protection Bureau has announced that it will draw up policies related to a congestion charge in a newly issued document."

Thursday, 27 March 2014

I've been busy, and meanwhile lots has been going on in the world of road pricing. All of which I will giving more attention in the coming week or so.

They are:
- New push for tolling reform in New York that if implemented, would effectively be a congestion pricing scheme for the city that benefits residents of outer suburbs;
- A Ministry of Transport and Communications Working Group in Finland has recommended that the country move away from ownership based taxes to a "kilometre based" tax system;
- Germany is expanding the scope of its distance based truck toll and will introduce a private car vignette from 2016;
- Infrastructure Partnerships Australia, a lobby group advocating reform of infrastructure policy, has published a discussion paper, notably with several major Australian motoring associations, advocating fundamental reform of road transport taxation and charging, with a strong push to shift away from ownership and fuel taxes, to direct road pricing.

Wednesday, 19 March 2014

Private company Northgate Public services has been contracted to develop and manage the payment system for the UK's "HGV levy" as it is officially called.

It is, in fact, a truck vignette, similar to the Eurovignette (used in the Benelux countries, Sweden and Denmark), and the separate truck vignettes operating in a handful of other countries (Bulgaria, Romania, Hungary, Lithuania). Truck operators will need to prepay for access to all of the roads in the UK with the vignette, based on time.

To be fair Northgate is not responsible for the entire system, but rather the payment system for foreign users. UK registered lorry owners
will continue to pay the equivalent levy - but this time in parallel
with the annual Vehicle Excise Duty payment - with the DVLA. I know the European Commission has been less than impressed by this, but as long as vehicles are treated in a non-discriminatory matter then it shouldn't be an issue (although it does appear than, on compliance costs, UK trucks have an advantage).

Monday, 17 March 2014

I wrote over two years ago about Belgium's efforts (or rather the federal constituent parts of Belgium) to introduce a nationwide truck tolling system, in parallel with a light vehicle vignette. The truck toll part of it is moving forward, but the charge for light vehicles is on a different timescale. The vignette has been cancelled, as the three Belgian regional governments look at alternative solutions.

Distance based truck tolling

The three Belgian regions are currently mid-tender for procuring a heavy vehicle distance based tolling system. It is currently branded as Viapass. The entire system will be developed, built, financed, maintained and managed by a single private consortium (yet to be selected).

However, it appears the debate is moving towards proposals for a referendum on how to pay for public transport. An option that appears to have a range of options, excluding one - that users might be asked to pay.

The Globe and Mail reports that there is now debate about whether to include road pricing and bridge tolls (a blunt option) to raise revenue for public transport. The Provincial Government is apparently opposed to inclusion of "regional tolls" and "road pricing".

The report gives a good summary of the key issue:

The exchange is just the latest in what has been a five-year tussle between Lower Mainland mayors and the province in trying to figure out a way to pay for major transit improvements.

The two big projects on the horizon are a $3-billion subway line in Vancouver, from Commercial Drive to the University of B.C., and a $2-billion light-rail system in Surrey that would connect its city centre with three other important nodes.

Right now, TransLink, the regional agency that oversees transit, along with some roads and bridges in the region, pays for everything mainly through fares, property taxes and gas taxes.

That doesn’t provide the money to take on any more big construction projects, since the agency is already making payments for its hefty share of the recently built Canada Line and the Evergreen Line, currently under construction....

But the province has blown hot and cold on various suggestions, including tolls, road pricing, a vehicle levy, a regional sales tax and carbon-tax revenue.

The big mistake that could be made is that a solution is developed based on raising revenue rather than the impact on transport use and economic benefits.

It is clear that there could be reforms of taxation and funding of transport in Vancouver and the Province as a whole, and that there will be new pressures as Washington State progresses towards supplementing or replacing fuel taxation with road user charging based on distance.

However, the debate hasn't really gone far enough into focusing on how to treat road pricing.

Thursday, 13 March 2014

Singapore newspaper TODAY reports that the Singaporean government is going to replace the existing congestion pricing system (called ERP - Electronic Road Pricing) by 2020, implicitly with a GNSS based system that will allow more dynamic and variable pricing by individual road and time of day.

The new system will allow the Government to calibrate the charging of motorists in proportion to the congested road segments that they use — “a fairer approach”, as Mrs Teo put it. It can also provide value-added services, such as navigation, payment for roadside parking in lieu of parking coupons and real-time traffic information.

It also explains a number of other measures to support car-sharing schemes, incentives to promote purchases of newer vehicles including discounts to the Certificates of Entitlement (permits to own motor vehicles) for those buying vehicles with the cleanest burning engines.

Whilst Singapore is different from many cities (not least being a city state, with a reputation for having quite strict laws), this move is significant.

Singapore may be the first city in the world to introduce congestion pricing using GNSS technologies. It will be able to set and vary charges on roads at little cost, and be able to be as flexible as it wishes in how it sets charges (and Singapore is already the world leader on this). As such it is the holy grail of marginal road pricing, because it gets away from the need to install specialist equipment on every road, and means time and place based pricing can be implemented.

With six years to implement, Singapore has plenty of time to get it right. What will be interesting is what other cities will follow, or if any dare to do so in advance of Singapore.

Meanwhile, Senior Minister of State for Finance and Transport Josephine Teo insists that no new roads will be charged during the transition, and no new gantries will be introduced. That's a relief, given the size of ERP gantries is enormous - partly due to the technology available at the time (1997) and because the system involves not just detection of a vehicle tag, but a read/write application to deduct funds from prepaid smartcards.

Whilst some Singaporeans are concerned about privacy, I suspect others will be pleased to see the back of these gantries once the new system is in place.

Singapore ERP gantry

According to TODAY, tenders will be called in the coming months to develop and build the system.

A complete interactive map of all Singapore ERP gantries is available here, where you can click on each gantry, see its hours of operation and the different prices which in some cases vary on increments of five minutes.

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What is road pricing?

Road pricing is any system that directly charges motorists for the use of a road or network of roads. Traditionally it has meant tolls on single routes, particularly crossings such as bridges or tunnels. More recently it also includes area, cordon and zone pricing of urban areas, and distance and time based charging of whole networks. It does not include fuel or tyre taxes, or taxes on ownership or purchase of road vehicles.